Retirement Planning

Global human resources consulting and outsourcing company, Hewitt Associates, is pushing for federal action to help put a stop to the lack of transparency both employers and workers deal with when trying to understand how 401(k) plan fees are being charged.

The company believes that because investment managers and other service providers are not obligated to tell how they're charging, workers are missing out on the retirement savings that could help them properly rebuild their nest eggs after the financial crisis.

Investment Managers Not Telling the Whole Story

According to Hewitt Associates, millions of employees who are participating in 401(k) plans may be paying unnecessarily high fees because the service providers their employers are working with are charging administrative fees based on the amount of money (assets) in the plan. Taking this route means the providers can charge more than they would be able to if they were charging on a fee-for-service model that bases fees on the number of participants it's servicing.

But worse, because these providers aren't obligated to talk about what they're charging, both employers and workers are paying higher fees than necessary, resulting in employees missing out on a fair chance to recover the money lost after the financial crisis.

Hewitt Proposes Federal Action to Obtain Transparency

In order to make sure that employers and employees know exactly what's being charged by investment managers, Hewittproposes that federal action be taken sooner than later. The hope is that if plan sponsors and individuals receive better information on fees, employers will be better able to protect and enhance their employees' retirement savings by providing a better climate for negotiating lower fees for 401(k) plans.

Recent reportsshow thatnearly half of all American workers have less than $10,000 in their nest egg. Hewitt hopes that this can change in the near future. Currently, there are pieces of legislation moving throughthe House and Senate that could help make disclosure a necessity.However, it's possible that with the governmenthoping to take over 401(k)s and IRAs to pay down the deficit, this particular issue may no longerbe a cause for concern.

A new survey released by the Employee Benefit Research Institute revealed that the percentage of American workers with very little in the pot for retirement savings grew for the third straight year. According to the Retirement Confidence Survey, which was released on Tuesday, the percentage of workers who have less than $10,000 in retirement savings grew four percent between 2009 and 2010.

Statistics from the Employee Benefit Research Institute

It seems that workers have had more trouble than ever saving for their nest egg, whether it be in the 401(k), IRA, or savings account. Some statistics from the Employee Benefit Research Institute are very telling of the state of today's American workersandtheir ability to savefor retirement:

• 43 percent of workers said they have less than $10,000 in savings in 2010. This number grew from 39 percent in 2009.
• 27 percent of workers said they had less than $1,000. This number jumped from 20 percent in 2009.
• 69 percent of workers said they saved for their nest eggs in 2010. This number dropped from 75 percent in 2009.
• Only 16 percent of respondents said they have confidence in their ability to save enough for a comfortable retirement. This is the second-lowest point in the 20-year history of the survey.

The money for retirement counted in this survey didn't include the value of primary homesor defined-benefit pension plans.

Americans Are Still Shell-Shocked

It seems that many Americans are still shell-shocked after losing much of their 401(k) during the financial crisis. Even though many workers regained their investments in 2009, some are still concerned about their ability to save in the long term.

One major contributorof this attitude toward retirement is job loss. However, mortgage problems and even the suspension of many corporate 401(k) matches in 2009 have played vital roles. Most workers are more concernedwith their immediate issues than planning for their long-term goals. However, these goals are still important.

If you've reached a point that you no longer know how to save for retirement, it's good to keep in mind that there are always ways for you to rebuild your nest egg, even if you lost most of it during the financial crisis. It's never too late to pull your finances together, so use today to pick yourself up and start saving for your future once again.

A secure and comfortable retirement is a dream that many of us have. Check out these retirement tips from personal finance bloggers around the web to find out what you can start doing today to help you achieve that goal.

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